2. • Accounting
Internal records
Sources • Marketing data
Secondary Data
Collection External • Internet
Sources • Periodicals
• Reports
• Personal
Observation • Mechanical
Primary Data
Collection • Mail/e-mail
Surveys
• Telephone
• Personal
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5. Strengths Weaknesses
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6. Strengths Weaknesses
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Maintain, Build and Leverage Improve or Stop
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8. Strengths Weaknesses
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9. "There is no reason anyone would want a computer in their home."
- Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977
"This 'telephone' has too many shortcomings to be seriously considered
as a means of communication. The device is inherently of no value to
us.“
- Western Union internal memo, 1876.
"The wireless music box [Radio] has no imaginable commercial value.
Who would pay for a message sent to nobody in particular?"
- David Sarnoff's associates in response to his urgings for investment in the radio in the
1920s.
"Television won't be able to hold onto any market it captures after the
first six months. People will soon get tired of staring at a plywood box
every night."
- Darryl F Zanuck, 1946.
What managers need is a picture of the way the world might be in a
decade or two. They can then be in a position to evaluate technologies
and strategies in terms of how well they fit in with the imagined future
state. This picture of the future is known as a scenario.
10. Profit $250M
Ultimate
Objective Target growth 15%
rate
Objective Measurement
Strategic target $503M
Gap in 5 years
Sales target ?
Future Projects
Current Operations
Time
The discussions surrounding which things to put on the chart, and whether or not they really count as strengths or weaknesses, are where the value of SWOT lies. It focuses attention and encourages strategic thinking. An effective SWOT analysis can only be completed in conjunction with an environmental analysis—it is this analysis which will give an indication of the opportunities and threats components of the grid.In terms of truly superior attributes, compared to the rest of the players in the industry, it is unlikely that a firm will have more than a very few actual strengths. Why should our customers come to us and not our competitors? An issue may be both a strength and a weakness, such as a high production capacity which can mean a company can take advantage of a large volume with economics of scale but may have high fixed costs at low levels. In a similar way, a change in tastes and fashion may be viewed as an opportunity or a threat.
MATCH:Starbucks not an overnight success in the US. Strength: expertise in sourcing and producing coffee.Opportunity: Desire for an upmarket coffee experience for US consumers.Matching: to extend the brand offering to "re-creating the Italian coffee-bar culture in the United States [as] Starbucks' differentiating factor".CONVERT: THREAT TO OPPORTUNITYA threat McDonald's position in the wake of movies such as Super Size Me was a movement towards healthier living where McDonald's was decidedly not well positioned.Converting: Using it’s standardized food processing skills, McDonald’s created a whole new line of “Healthy Options” like salads and Yoghurts to take advantage of a growing opportunity.CONVERT: WEAKNESS INTO STRENGTHDell consumer customers suffered from long wait times and poor accents in Bangalore and Manilla call centers. So introduced new Your Tech Team service (2008), with agents in the United States, costs $12.95 a month for customers with a Dell account, or $99 a year for people who buy a new computer. It also promises that wait times will average two minutes or less.REMEDYING: ELIMINATING A WEAKNESSHowever, For Corporate market, Dell eliminated servicing from India, and routed all calls back to US call centers. In 1986, Hyundai began selling cars in the US – low price, low quality. Perception of the brand was poor. In 1999, invested heavily in in the quality, design, manufacturing, and long-term research of its vehicles. It added a 10-year or 100,000-mile (160,000 km) warranty to cars sold in the United States and launched an aggressive marketing campaign. Today Hyundai has almost 5% of the US market (4.6% in 2010).
Now comes the exciting part. Once we have identified and categorized the factors, what should we do as a firm?
The reason for these errors is a failure to grasp (or to conceptualize) the way the world is moving.
Start by setting key strategic objective for sometime in the futureFor example, a firm with $250M in profit may set a target growth rate of 15% per year for the next 5 years.Therefore strategic target is $503M in profit in 5 years.To achieve that, firm may decide it needs to have a certain level of sales in 5 years time.The firm forecasts the likely performance of its current operations, and the likely contribution to performance of new strategic initiatives.Forecasted separately as new strategic initiatives are subject to greater uncertainty than current operations, and the firm’s forecasts have a wider margin of error.Management assesses whether there is any remaining gap between desired objective and forecasted level of performance.If there is a gap, then additional strategies/new projects are required.
Efficiency strategies: These strategies are designed to increase profits (or throughput) by making better use of resources. Reduce time or waste by re-engineering your process, invest in technology, outsource non-core functions. BCG – reducing the time from an order-to -invoice, by eliminating extra steps and rework.Intensive strategies: These exploit the firm's existing products and markets further:Market penetration to increase sales to existing marketsMarket development to find additional markets for the products Product development to find additional products for the firm's existing customer baseIncrease marketing, salesforce, R&D budgets, new distributors, product extensions. Staying within your current markets, but increasing share. Extend product lifecycle – sell older products in developing markets. Grain co selling older silo models in Asia.Diversification: These aim to reduce the risks of the business or increase its growth prospects by taking it into new industries.Acquisitions, JVs, partnerships, starting a new business unit. Softlogic getting into healthcare by buying Aasiri and Central Hospitals.
